(All amounts in US$ unless otherwise
specified)
VANCOUVER, April 25, 2017 /PRNewswire/ - Capstone
Mining Corp. ("Capstone" or the "Company") (TSX: CS) today
announced its financial results for the quarter ended March 31, 2017. Cash flow from operating
activities was $22.0 million or
$0.06 per share. The net loss for the
period was $7.4 million or
$0.02 per share and the adjusted net
loss was $2.0 million or $0.01 per share after adjusting for certain
non-cash and non-recurring charges. Copper production for the
quarter totalled 20,950 tonnes (20,230 tonnes of payable copper) at
a C1 cash cost1 of $1.98
per payable pound produced with copper sales for the quarter of
21,582 tonnes at a C1 cash cost1 of $1.69 per payable pound sold.
Capstone will hold a conference call and webcast
on Wednesday, April
26, 2017 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the quarter
ended March 31, 2017, which are
available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to March 31, 2017, in addition to the
Q1 2017 year-end webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
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|
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Q1
2017
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Q1
2016
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Revenue ($
millions)
|
|
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128.0
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126.2
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|
|
|
|
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Copper
produced (tonnes)
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20,950
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24,547
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Payable copper
produced (tonnes)
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20,230
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23,694
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C1 cash cost per
payable pound produced1 ($/lb)
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1.98
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1.72
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All-in cost per
payable pound produced1 ($/lb)
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2.64
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2.23
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Fully-loaded
all-in cost per payable pound produced1
($/lb)
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2.80
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2.36
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Copper sold
(tonnes)
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21,582
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27,985
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Realized copper
price per pound sold ($/lb)*
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2.68
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2.19
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Adjusted realized
copper price per pound sold ($/lb) **
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2.44
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2.35
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C1 cash cost per
payable pound sold1 ($/lb)
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1.69
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1.77
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All-in cost per
payable pound sold1 ($/lb)
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2.31
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2.22
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Fully-loaded
all-in cost per payable pound sold1
($/lb)
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2.46
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2.33
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Net loss ($
millions)
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(7.4)
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(12.8)
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Net loss
attributable to shareholders ($ millions)
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(7.5)
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(12.7)
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Net loss per
common share ($)
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(0.02)
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(0.03)
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Adjusted net
loss1 ($ millions)
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(2.0)
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(1.5)
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Adjusted net
loss1 attributable to shareholders ($
millions)
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(2.1)
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(1.5)
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Adjusted net
loss1 per common share ($)
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(0.01)
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(0.00)
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Cash flow from
operating activities
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$22.0
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$32.2
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Cash flow from
operating activities per common share ($)
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0.06
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0.08
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Operating cash
flow before changes in working
capital1 ($ millions)
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24.2
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18.9
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Operating cash
flow before changes in working capital per common share1
($)
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0.06
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0.05
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Cash and cash
equivalents ($ millions)
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109.4
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121.1
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Net
debt1 ($ millions)
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199.5
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228.2
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* Q1 2017 includes a provisional pricing adjustment of
$5.2 million (2016 – negative
$5.6 million) related to prior
shipments, equivalent to $0.11 per
pound (2016 – $(0.09) per pound) of
copper sold during the quarter. ** Q1 2017 adjusted realized copper
price includes the provisional pricing adjustments noted above and
realized loss of $13.9 million (2016
gain – $9.6 million) equivalent to
$(0.29) per pound (2016 gain -
$0.16 per pound) related to copper
derivative contracts exercised during the quarter.
"In the first quarter of 2017 we generated $22 million of operating cash flow despite
challenging operating conditions at Pinto Valley," said
Darren Pylot, President and CEO of
Capstone. "All three of our mines generated positive net earnings
for the quarter, supported by higher realized metal prices."
"We also recently announced a two year extension of our credit
facility, to 2021, giving Capstone significant financial
flexibility to meet our current and anticipated operating
requirements," continued Mr. Pylot. "In addition, at current copper
prices, we anticipate the continuation of operations at
Minto until mid-2020 with a
potential mine life extension beyond 2020."
Financial and Operational Highlights for the Quarter Ended
March 31, 2017
- Net loss of $7.4 million
included:
-
- Earnings from mining operations of $27.0
million,
-
- Realized copper price of $2.68
per pound
- Production costs included a $1.1
million non-cash charge related to the
write-down of inventory at the Pinto Valley mine
- A commodity derivative loss of $13.9
million, comprising a realized loss of $11.6 million combined with an unrealized
loss of $2.3 million,
- An income tax expense of $3.9
million.
- Operating cash flow before changes in working
capital1 of $24.2 million
or $0.06 per common share.
- Working capital decreased $22.8
million to $148.3 million at
March 31, 2017 from $171.1 million at December
31, 2016. Cash decreased to $109.4
million at March 31, 2017 from
$130.4 million at December 31, 2016 largely as a result of a
$20.0 million debt repayment made in
January, 2017.
- Production of 20,230 tonnes of payable copper at a C1 cash
cost1 of $1.98 per pound
of payable copper produced and fully-loaded all-in cost1
of $2.80 per pound of payable pound
copper produced.
- Revenue of $128.0 million
generated primarily from the sale of 21,582 tonnes of copper.
Production and Additional Highlights for the Quarter Ended
March 31, 2017
Pinto Valley Mine:
- Produced 11,300 tonnes of copper during Q1 2017 at a C1 cash
cost1 of $2.18 per pound
of payable copper produced and all-in cost1 of
$2.77 per pound of payable copper
produced.
- Copper production at Pinto Valley was lower quarter over
quarter for a number of reasons. First, it was affected by a 7-day
planned shutdown in January to complete repairs in the fine ore
bins and the tailing thickener distribution system and then by
considerable rain in the first quarter. Pinto Valley received five
inches of rain over a two day period in late January, followed by
additional rainfall in the following weeks. This rain reduced
mining productivity and slowed the primary crusher intake, delaying
the return to full operations from the planned shutdown. Mine plan
sequencing also had to be changed to address high moisture in the
bottom of the pit. Following this shutdown, the saturated fine ore
placed additional stress on the primary crusher mainframe. As a
result, the lower frame replacement, originally deferred from Q2
2016, was done over 11 days in late February and early March.
Temporary primary crushing units allowed for production at reduced
rates. Full production resumed on March 9,
2017 and since then throughput has averaged above 59,000
tonnes per day as of April 24.
Cozamin Mine:
- Produced 4,130 tonnes of copper during Q1 2017 at a C1 cash
cost1 of $1.33 per pound
of payable copper produced and all-in cost1 of
$1.94 per pound of payable copper
produced.
- During Q1 2017, grade and throughput both improved for the
quarter, with recovery comparable to Q1 2016. This is in part due
to the significant progress made in development rates since the
process and contractor changes which were made in 2016.
- Subsequent to quarter end, on April 4,
2017, the precious metal streaming arrangement with Silver
Wheaton Corp. expired. After this date, the full silver by-product
credit is earned by Cozamin. As included in our guidance, this is
expected to increase our by-product credits by approximately
$0.40 per pound.
Minto Mine:
- Produced 5,520 tonnes of copper during Q1 2017 at a C1 cash
cost1 of $2.05 per pound
of payable copper produced and all-in cost1 of
$2.10 per payable pound of copper
produced.
- During Q1 2017, grade for the quarter was lower than originally
planned due to mine plan sequencing changes. These were made to
optimize the mine plan in anticipation of the extension of
operations at Minto beyond 2017
and to reduce re-handling costs. As a result, more low grade,
partially oxidized ore was directed to the mill causing recoveries
to be slightly behind plan. This was partially offset by higher
throughput.
- At current copper prices, Capstone anticipates the continuation
of operations at Minto until
mid-2020, subject to permitting and regulatory approvals. Capstone
is also evaluating further deposits for re-inclusion into reserves,
which may support additional mine life beyond 2020.
Additional highlights:
- Effective April 19, 2017, the
Company amended its Senior Secured Corporate Revolving Credit
Facility ("RCF") to provide for an extension to April 19, 2021 and a reduction in the credit
available under the facility. The amendment:
-
- Extends the maturity of the Third Amended and Restated Credit
Agreement from January 16, 2019 to
April 19, 2021;
- Reduces the credit limit to $350
million on April 19, 2017 and
requires an annual $25 million
reduction on each anniversary of the facility to $275 million on April 19,
2020;
- Maintains the current pricing grid (starting at LIBOR + 2.5%
and increasing to LIBOR + 3.5% based on the total leverage ratio)
until March 31, 2019, after which
date pricing increases to LIBOR + 3.0% (adjustable to LIBOR + 4.5%
depending on the total leverage ratio); and
- Cancels the accordion feature of $60
million.
All other material terms and conditions of the existing RCF
remain in place.
In addition to the amendment described above, Capstone repaid
$10 million on April 19, 2017, reducing drawn debt to
$298.9 million.
Operating Outlook
Capstone's 2017 production guidance
for 94,000 tonnes (±5%) of copper at C1 cash cost1 of
$1.60 to $1.70 per pound of payable
copper produced and All-in cost1 of $2.15 to $2.25 per pound of payable copper
produced remains unchanged. Minto
and Cozamin are expected to complete the year on, or slightly
above, plan and Pinto Valley is expected to attain higher run rates
for the remainder of 2017 since the major planned maintenance
activity was completed in the first quarter.
Conference Call and Webcast Details
Date:
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Wednesday, April 26,
2017
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Time:
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11:30 am Eastern Time
(8:30 am Pacific Time)
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Dial
in:
|
North America:
1-888-390-0546, International: +416-764-8688
|
Webcast:
|
http://event.on24.com/r.htm?e=1383293&s=1&k=8C2CB279A9CAA1477A4D9A6573F75350
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Replay:
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North America:
1-888-390-0541, International: +416-764-8677
|
Replay Passcode:
|
472544#
|
The conference call replay will be available until Wednesday, May 3, 2017. The conference call audio
and transcript will be available on Capstone's website within
approximately 48 hours of the call at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
About Capstone Mining Corp.
Capstone Mining Corp. is a
Canadian base metals mining company, focused on copper. We are
committed to the responsible development of our assets and the
environments in which we operate. Our three producing mines are the
Pinto Valley copper mine located in Arizona, US, the Cozamin polymetallic mine in
Zacatecas State, Mexico and the
Minto copper mine in Yukon, Canada. In addition, Capstone has two
development projects; the large scale 70% owned copper-iron
Santo Domingo project in Region
III, Chile, in partnership with
Korea Resources Corporation, and the 100% owned Kutcho copper-zinc
project in British Columbia,
Canada, as well as exploration properties in Chile and US. Capstone's strategy is to focus
on the optimization of operations and assets in politically stable,
mining-friendly regions, centred in the Americas. Our headquarters
are in Vancouver, Canada and we
are listed on the Toronto Stock Exchange (TSX). Further information
is available at www.capstonemining.com.
Cautionary Note Regarding Forward-Looking
Information
This document may contain "forward-looking
information" within the meaning of Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking statements"). These forward-looking
statements are made as of the date of this document and Capstone
does not intend, and does not assume any obligation, to update
these forward-looking statements, except as required under
applicable securities legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the estimation of mineral
resources and mineral reserves, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production and capital expenditures, the success of our
mining operations, environmental risks, unanticipated reclamation
expenses and title disputes. In certain cases, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases, or statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative of these terms or comparable terminology.
In this document certain forward-looking statements are identified
by words including "anticipate", "guidance", "plan" and "expected".
By their very nature, forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, amongst others, risks related to inherent hazards
associated with mining operations, future prices of copper and
other metals, compliance with financial covenants, surety bonding,
our ability to raise capital, Capstone's ability to acquire
properties for growth, counterparty risks associated with sales of
our metals, use of financial derivative instruments and associated
counterparty risks, foreign currency exchange rate fluctuations,
changes in general economic conditions, accuracy of mineral
resource and mineral reserve estimates, operating in foreign
jurisdictions with risk of changes to governmental regulation,
compliance with governmental regulations, compliance with
environmental laws and regulations, reliance on approvals, licences
and permits from governmental authorities, impact of climatic
conditions on our Pinto Valley, Cozamin and Minto operations, aboriginal title claims and
rights to consultation and accommodation, land reclamation and mine
closure obligations, uncertainties and risks related to the
potential development of the Santo Domingo Project, increased
operating and capital costs, challenges to title to our mineral
properties, maintaining ongoing social license to operate,
dependence on key management personnel, potential conflicts of
interest involving our directors and officers, corruption and
bribery, limitations inherent in our insurance coverage, labour
relations, increasing energy prices, competition in the mining
industry, risks associated with joint venture partners, our ability
to integrate new acquisitions into our operations, cybersecurity
threats, legal proceedings and other risks of the mining industry
as well as those factors detailed from time to time in the
Company's interim and annual financial statements and management's
discussion and analysis of those statements, all of which are filed
and available for review under the Company's profile on SEDAR at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause our actual results, performance
or achievements to differ materially from those described in our
forward-looking statements, there may be other factors that cause
our results, performance or achievements not to be as anticipated,
estimated or intended. There can be no assurance that our
forward-looking statements will prove to be accurate, as our actual
results, performance or achievements could differ materially from
those anticipated in such statements. Accordingly, readers should
not place undue reliance on our forward-looking statements.
National Instrument 43-101 Compliance
Unless otherwise
indicated, Capstone has prepared the technical information in this
news release ("Technical Information") based on information
contained in the technical reports, news releases and MD&A's
(collectively the "Disclosure Documents") available under Capstone
Mining Corp.'s company profile on SEDAR at www.sedar.com. Each
Disclosure Document was prepared by, or under the supervision of, a
qualified person (a "Qualified Person") as defined in National
Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI
43-101"). Readers are encouraged to review the full text of
the Disclosure Documents which qualifies the Technical
Information. Readers are advised that mineral resources that
are not mineral reserves do not have demonstrated economic
viability. The Disclosure Documents are each intended to be read as
a whole, and sections should not be read or relied upon out of
context. The Technical Information is subject to the assumptions
and qualifications contained in the Disclosure Documents.
The technical information in this news release ("Technical
Information") was prepared by, or under the supervision of, a
qualified person (a "Qualified Person") as defined in National
Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI
43-101"). The disclosure of the Technical Information contained in
this news release has been reviewed and approved by Gregg Bush, P. Eng., Senior Vice President and
Chief Operating Officer. Technical Information related to mineral
exploration activities has been reviewed and approved by
Brad Mercer, P. Geol., Senior Vice
President, Exploration. Both are Qualified Persons under NI
43-101.
Alternative Performance Measures
The items marked with
a "1" are alternative performance measures and readers
should refer to Alternative Performance Measures in the Company's
Consolidated Management's Discussion and Analysis for the quarter
ended March 31, 2017 as filed on
SEDAR and as available on the Company's website.
Cautionary Note to United States Investors
This news
release contains disclosure that has been prepared in accordance
with the requirements of Canadian securities laws, which differ
from the requirements of US securities laws. Without limiting the
foregoing, this news release may refer to technical reports that
use the terms "indicated" and "inferred" resources. US investors
are cautioned that, while such terms are recognized and required by
Canadian securities laws, the SEC does not recognize them. Under US
standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made. US investors are cautioned not
to assume that all or any part of indicated resources will ever be
converted into reserves. US investors should also understand that
"inferred resources" have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. It cannot be assumed that all or any part of
"inferred resources" will ever be upgraded to a higher category.
Therefore, US investors are also cautioned not to assume that all
or any part of inferred resources exist, or that they can be mined
legally or economically. Accordingly, information concerning
descriptions of mineralization and resources contained in this news
release may not be comparable to information made public by US
companies subject to the reporting and disclosure requirements of
the SEC.
SOURCE Capstone Mining Corp.